Parmalat SpA is a multinational Italian dairy and food corporation. Having become the leading global company in the production of long-life milk using the ultra-high-temperature (UHT) process, the company collapsed in 2003 with a €14 billion ($20bn; £13bn) hole in its accounts in what remains Europe's biggest bankruptcy.[2] Since 2011, it is a subsidiary of French group Lactalis. Today, Parmalat is a company with a global presence, having operations in Europe, South America, North America, Australia, China and South Africa.

Still specializing in UHT milk and milk derivatives (varieties of yogurt, cheese, butter, ice cream, etc.), the group also has an interest in fruit juices. These products are distributed under brand names such as Lactis, Santal, Malù, and Kyr. Its worldwide operations include almost 140 production centres and more than 36,000 employees, while 5,000 Italian dairy farms are dependent on the company for the bulk of their business. Its shares are listed on the Borsa Italiana.

Parmalat's name was notable outside Italy in Formula One. Its name was emblazoned on the cap of Niki Lauda, which he always wore following his 1976 German Grand Prix accident. The Brabham Formula One team was sponsored by Parmalat through some of its most successful years in the late 1970s and early 1980s. Owned by Bernie Ecclestone, Nelson Piquet and the Brabham team won two World Drivers Championships while sponsored by Parmalat. It also sponsored Pedro Diniz throughout his Formula One career; its logo appeared on Forti, Arrows, Ligier and Sauber cars from 1995 to 2000, and also on the Prost team's cars when Diniz bought a stake in the team in 2001.

In 1997, Parmalat jumped into the world of financial markets in a big way, financing several international acquisitions, especially in the Western Hemisphere, with debt. But by 2001, many of the new divisions were producing losses, and the company financing shifted largely to the use of derivatives, apparently at least in part with the intention of hiding the extent of its losses and debt. In February 2003, chief financial officer Fausto Tonna unexpectedly announced a new €300 million bond issue. This came as a surprise both to the markets and to the CEO, Calisto Tanzi. Tanzi forced Tonna to resign and replaced him with Alberto Ferraris. According to an interview he later gave Time magazine, Ferraris was surprised to discover that, though now CFO, he still did not have access to some of the corporate books, which were being handled by chief accounting officerLuciano Del Soldato. He began making some inquiries and began to suspect that the company's total debt was more than double that on the balance sheet.[3]

The plan for a €300M fundraising effort was dropped in September 2003 and the company's shares depreciated significantly as a result of the publicised concerns raised over transactions with mutual fundEpicurum, a Cayman-based company linked to Parmalat by November. Ferraris resigned less than a week after the public fall-out and was replaced by Del Soldato. Del Soldato resigned the next month, unable to get cash from Epicurum fund, needed to pay debts and make bond payments totalling at least €150M. Enrico Bondi was called in to help the company as it went into administration, while Tanzi himself resigned as chairman and CEO. Bonlat was a subsidiary of Parmalat set up in the Cayman Islands. Bonlat's bank, Bank of America, then released a document showing €3.95 billion in Parmalat's bank account as a forgery. Prime Minister Silvio Berlusconi initiated a fraud investigation and appointed Bondi to administer the company's rescue. Hundreds of thousands of investors lost their money and would never recover it. The company officially went bankrupt, though the Italian government used the legal mean "commissariamento" to save the trademark.[citation needed]

Calisto Tanzi, once a symbol of unlimited success, was detained hours after the firm was declared officially insolvent in late December and admitted that there was a hole of €8bn in Parmalat's accounts, but denied any cover-up. The arrest of five other executives followed. The auditors of the administration eventually determined that the debts amounted to €14.3bn, which was almost eight times the sum originally stated. Several of the company's subsidiaries subsequently went insolvent, including its Brazilian and American operations and its football club in Parma. Parmalat[who?] then sued several multi-national banks for huge sums of money.[citation needed]

Tanzi was eventually charged with financial fraud and money laundering. Italians were shocked that such a vast and established empire could crumble so quickly. Among the questionable accounting practices used by Parmalat: it sold itself credit-linked notes, in effect placing a bet on its own credit worthiness in order to conjure up an asset out of thin air. After his arrest, Tanzi reportedly admitted during questioning at Milan's San Vittore prison, that he diverted funds from Parmalat into Parmatour and elsewhere. The family football and tourism enterprises were financial disasters; as well as Tanzi's attempt to rival Berlusconi by buying Odeon TV, only to sell it at a loss of about €45 million. Tanzi was sentenced to 10 years in prison for fraud relating to the collapse of the dairy group. The other seven defendants, including executives and bankers, were acquitted. Another eight defendants settled out of court in September 2008.[2] In September 2009, three lawsuits by Parmalat Capital Finance Ltd. and Enrico Bondi, CEO of Parmalat, against Bank of America and auditors Grant Thornton, were dismissed.[4]